Skip to main content

Sign up for our newsletter.

Quality journalism. Progressive values. Direct to your inbox.

Corporate gatekeepers and big tech monopolists are making it more difficult than ever for independent media to survive. Please chip in today.

A portrait of Maya Katz-Ali with her new car charging at a station along Lakeshore Avenue, Tuesday, Nov. 10, 2020, in Oakland, Calif. Katz-Ali recently bought the electric car with the help of an incentive through the state's Clean Cars for All program, which is designed to help Californians from diverse backgrounds purchase zero-emissions vehicles. (Photo: Santiago Mejia/The San Francisco Chronicle via Getty Images)

A portrait of Maya Katz-Ali with her new car charging at a station along Lakeshore Avenue, Tuesday, Nov. 10, 2020, in Oakland, Calif. Katz-Ali recently bought the electric car with the help of an incentive through the state's Clean Cars for All program, which is designed to help Californians from diverse backgrounds purchase zero-emissions vehicles. (Photo: Santiago Mejia/The San Francisco Chronicle via Getty Images)

Biden's New Industrial Policy Must Not Repeat the Mistakes of the Past

America’s old industrial policy was stifling innovation and gauging taxpayers and consumers. The challenges ahead demand a very different economy.

Robert Reich

 by RobertReich.org

America is about to revive an idea that was left for dead decades ago. It's called industrial policy, and it's at the heart of Joe Biden's plans to restructure the U.S. economy.

The dirty little secret is that America already has an industrial policy, but one that's focused on pumping up profits with industry-specific subsidies, tax loopholes and credits, bailouts, and tariffs.

When industrial policy was last debated in the 1980s, critics recoiled from government "picking winners." But times have changed. Devastating climate change, a deadly pandemic, and the rise of China as a technological powerhouse require an active government pushing the private sector to achieve public purposes.

The dirty little secret is that America already has an industrial policy, but one that's focused on pumping up profits with industry-specific subsidies, tax loopholes and credits, bailouts, and tariffs. The practical choice isn't whether to have an industrial policy but whether it meets society's needs or those of politically powerful industries.

Consider energy. The fossil fuel industry has accumulated "billions of dollars in subsidies, loopholes, and special foreign tax credits," in Biden's words. He intends to eliminate these and shift to non-carbon energy by strengthening the nation's electrical grid, creating a new "clean electricity standard" that will force utilities to end carbon emissions by 2035 and providing research support and tax credits for clean energy.

It's a sensible 180-degree shift of industrial policy.

The old industrial policy for the automobile industry consisted largely of bailouts—of Chrysler in 1979 and General Motors and Chrysler in 2008.

Biden intends to shift away from gas-powered cars entirely and invest $174 billion in companies making electric vehicles. He'll also create 500,000 new charging stations.

This also makes sense. Notwithstanding the success of Tesla, which received $2.44 billion in government subsidies before becoming profitable, the switch to electric vehicles still needs pump priming.

Internet service providers have been subsidized by the states and the federal government, and federal regulators have allowed them to consolidate into a few telecom giants. But they've dragged their feet on upgrading copper networks with fiber, some 30 million Americans still lack access to high-speed broadband, and America has among the world's highest prices for internet service.

Biden intends to invest $100 billion to extend high-speed broadband coverage. He also threatens to "hold providers accountable," for their sky-high prices—suggesting either price controls or antitrust enforcement.

I hope he follows through. A proper industrial policy requires that industries receiving public benefits act in the public interest.  

The pharmaceutical industry exemplifies the old industrial policy at its worst. Big Pharma's basic research has been subsidized through the National Institutes of Health. Medicare, Medicaid, and the Affordable Care Act bankroll much of its production costs. The industry has barred Americans from buying drugs from abroad. Yet Americans pay among the highest drug prices in the world.

Biden intends to invest an additional $30 billion to reduce the risk of future pandemics—replenishing the national stockpile of vaccines and therapeutics, accelerating the timeline for drug development, and boosting domestic production of pharmaceutical ingredients currently made overseas.

That's a good start but he must insist on a more basic and long-overdue quid pro quo from big pharma: allow government to use its bargaining power to restrain drug prices.    

A case in point: The U.S. government paid in advance for hundreds of millions of doses of multiple COVID-19 vaccines. The appropriate quid pro quo here is to temporarily waive patents so vaccine manufacturers around the world can quickly ramp up. Americans can't be safe until most of the rest of the world is inoculated.

Some of Biden's emerging industrial policy is coming in response to China. Last week's annual intelligence report from the Office of the Director of National Intelligence warns that Beijing threatens American leadership in an array of emerging technologies.

Expect more subsidies for supercomputers, advanced semiconductors, artificial intelligence, and other technologies linked to national security. These are likely to be embedded in Biden's whopping $715 billion defense budget—larger even than Trump's last defense budget.

Here again, it's old industrial policy versus new. The new should focus on cutting-edge breakthroughs and not be frittered away on pointless projects like the F35 fighter jet. And it should meet human needs rather than add to an overstuffed defense arsenal.

Biden's restructuring of the American economy is necessary. America's old industrial policy was stifling innovation and gauging taxpayers and consumers. The challenges ahead demand a very different economy.

But Biden's new industrial policy must avoid capture by the industries that dominated the old. He needs to be clear about its aims and the expected response from the private sector, and to reframe the debate so it's not about whether government should "pick winners" but what kind industrial policy will help America and much of the world win.


This work is licensed under a Creative Commons Attribution-Share Alike 3.0 License.
Robert Reich

Robert Reich

Robert Reich, is the Chancellor’s Professor of Public Policy at the University of California, Berkeley, and a senior fellow at the Blum Center for Developing Economies. He served as secretary of labor in the Clinton administration, for which Time magazine named him one of the 10 most effective cabinet secretaries of the twentieth century. His book include:  "Aftershock" (2011), "The Work of Nations" (1992), "Beyond Outrage" (2012) and, "Saving Capitalism" (2016). He is also a founding editor of The American Prospect magazine, former chairman of Common Cause, a member of the American Academy of Arts and Sciences, and co-creator of the award-winning documentary, "Inequality For All." Reich's newest book is "The Common Good" (2019). He's co-creator of the Netflix original documentary "Saving Capitalism," which is streaming now.

We've had enough. The 1% own and operate the corporate media. They are doing everything they can to defend the status quo, squash dissent and protect the wealthy and the powerful. The Common Dreams media model is different. We cover the news that matters to the 99%. Our mission? To inform. To inspire. To ignite change for the common good. How? Nonprofit. Independent. Reader-supported. Free to read. Free to republish. Free to share. With no advertising. No paywalls. No selling of your data. Thousands of small donations fund our newsroom and allow us to continue publishing. Can you chip in? We can't do it without you. Thank you.

Kentucky Progressive Charles Booker Wins Democratic US Senate Primary

"We're going to beat Rand Paul," Booker confidently predicted, by "inspiring a vision that encourages people to believe things can be better."

Brett Wilkins ·


As Senators Try to Expand War Crimes Jurisdiction, Critics Ask if US War Criminals Count

"I've got names and addresses of American war criminals if any senators are interested," quipped veteran journalist Nick Turse.

Brett Wilkins ·


Climate Campaigners Demand Oxford, Cambridge Stop Taking Fossil Fuel Money

"This funding undermines climate justice, fueling the continued disproportionate harms of the fossil fuel industry on marginalized communities worldwide."

Julia Conley ·


Palestine Defenders Hail Rep. Tlaib's 'Historic' Nakba Resolution

"The time has come for the United States to correct an ongoing historical mistake it committed by recognizing the Palestinian Nakba, and to pressure Israel to respect American values that call for justice, equality, and freedom for all."

Brett Wilkins ·


Earth's Atmospheric CO2 Hasn't Been This High In Millions of Years

"Either we drive the fossil fuel industry into extinction—or the human race."

Kenny Stancil ·

Common Dreams Logo